What are the principles of salary packaging?
The basic principle of salary packaging is to provide the employee with choice in how they are remunerated (by either cash or benefits). The employer will offer a menu of benefits to choose from ; this will generally differ between employers as a result of the different approaches adopted by employers in determining the usefulness of various types of benefits. In offering salary packaging to employees, the employer will not want the cost of the employee’s position to increase and therefore will use the concept generally known as total employment cost to calculate the cost of the employee’s position. This cost is the administration basis of salary packaging. The employer (subject to other local rules) basically says to the employee, this is the cost of your position, provided you keep the choice of benefits (and fringe benefits tax), superannuation and salary to no more than this cost then the decision of how you are paid is all yours. Where any benefits attract fringe benefits tax then
